K-F Takes Over

The automaking partnership between the Kaiser-Frazer Corp. and the Graham-Paige Motors Corp. was lopsided from the start. Newborn K-F quickly raised $53,000,000 in two stock issues. But old, financially queasy Graham floated only $11,500,000 in bonds to finance its part of the venture. By last week production delays had so cut into this cash that Graham could not go on without help.

The help came from K-F. Under a plan which Graham stockholders are expected to approve, K-F will take over Graham's bonded indebtedness, most of its assets and its automaking (i.e., production of the Frazer). Graham will make only Rototillers (combination plow-harrows), and distribute other farm equipment. ,

For bailing out Graham, K-F will get auto parts, dies, etc. and $3,000,000 in cash. Graham will get the $3,000,000 from

Bank of America on a note guaranteed by the Henry J. Kaiser Co. and Joseph Frazer personally.

In return, K-F will undertake to pay both interest and principal on Graham's $8,500,000 bonded debt and will give Graham 750,000 shares of K-F stock (worth $6,000,000 on the current market). This.stock, along with what Graham got when K-F was formed, will give Graham a 21% interest in K-F. But Henry Kaiser and Joe Frazer will hold the voting rights on the stock until the Bank of America loan is paid.

Actually Henry and Joe's automaking venture was gaining little by shifting its money from one pocket to another. Joe Frazer, president of both companies, claimed that the shift would bring great savings by bringing production of the Kaiser Special and Frazer cars under one company. Actually production of both cars, which have exactly the same engines, bodies, chassis, was already a combined operation at Willow Run.

As usual, all this set other automen to speculating on how much longer K-F's cash would last. The only figure came recently from the always optimistic Joe Frazer. He said that they had $27,000,000 of their roll left.

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